We Serve America's RestaurantsRepresenting nearly 500,000 restaurant businesses, we advocate for restaurant and foodservice industry interests and provide tools and systems that help members of all sizes achieve success.

Minimize Risk. Maximize Protection.For over 40 years, ServSafe® training programs have delivered the knowledge, leadership and protection that have earned the trust and confidence of business leaders everywhere.

News & Research

Manage My Restaurant Section Navigation

Proposed swipe-fee settlement bad for business, NRA says

September 12, 2013

The National Restaurant Association said it continues to strongly object to a proposed settlement in ongoing litigation over credit-card interchange swipe fees.

The Association, in prepared testimony for a Sept 12 hearing before the U.S. District Court for the Eastern District of New York, said the proposed settlement does not protect restaurateurs from excessive, hidden and increasing card swipe fees. The NRA further noted that the proposed settlement could have a detrimental impact on the emerging mobile payments market.

“The National Restaurant Association represents a diverse industry with hundreds of thousands of locations and millions of employees, and we strongly object to the proposed settlement agreement,” said Scott DeFife, executive vice president of policy and government affairs. “A settlement is supposed to resolve issues at the center of the dispute. This proposal neither protects our members or consumers from excessive, hidden, and continuously increasing swipe fees, nor changes card network practices.”

DeFife noted that credit cards are used as a common form of payment in restaurants. Swipe fees are estimated at over 4 percent of restaurant sales on average, and with average profit margins of 3 to 5 percent, excessive and non-negotiable fees harm restaurants’ ability to grow and hire more people.

The Association joined the swipe fee litigation in 2006 as a named class plaintiff in the suit against MasterCard, Visa, and their member banks. Negotiations over several years resulted in a proposed settlement agreement filed with the court in July 2012. The NRA has objected to the agreement, and is the only named plaintiff representing the restaurant and foodservice industry perspective.

Liz Garner, the NRA’s director of commerce and entrepreneurship, said the Association is concerned that if the proposed settlement is approved by the Court without changes, it could negatively impact the emerging mobile-payments marketplace.

“We see plastic cards and mobile phones as fundamentally different payment products and believe they should be treated as such,” she said. “We have concerns the proposed settlement will further solidify efforts by the major card networks to impose the current system on unwilling and uninterested merchants as we move to mobile platforms. That behavior will be detrimental to restaurants, customers and the economy.”

Garner also said that if the proposed settlement’s broad legal release of claims remains intact, it would greatly inhibit the ability of merchants to challenge any similar Visa or MasterCard rule or rate changes in the future.

“With their control of over 80 percent of the credit-card market, very rarely, if ever, would either company face any barriers to doing as they choose,” she said.

The Association said that if businesses can’t challenge the card brands’ anticompetitive behavior through litigation, it would become more important than ever that Congress and regulatory authorities scrutinize and oversee the payments marketplace to ensure mobile payments can evolve and efficiencies for American consumers and the economy.